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Extra warranties 1: A waste of money

technofile  by al fasoldt

Columns and commentaries in a life-long dance with technology
 

Simple gray rule



Extra warranties 1: A waste of money 


By Al Fasoldt

Copyright © 1991, The Syracuse Newspapers

Buying a TV or VCR used to be easy. You walked into the store, checked the price and maybe got a few dollars off. That was it.

Whatever you bought came with a warranty. No big deal. You just hoped the thing would last longer than the warranty, and it usually did.

Times are different now. That TV and appliance store down the street is up against a tough economy. Profit margins on TVs and VCRs and all the other items are getting slimmer.

And so to keep the money rolling in, many electronics stores have turned to a trick of the automobile trade. They're hawking extra-cost warranties with every sale. Just as car dealers often load every car in their lot with nearly worthless "options" such as tape stripes and undercoating, many electronics stores are pushing high-profit warranties on each customer before they'll write up the sale.

Never mind those most electronic items come with adequate warranties these days. Never mind that actual breakdowns are less of a problem now than they ever were before. These stores want you to pay quite a bit extra—$40 or $50 or even $100—for the right to walk out of the place with your new TV or VCR.

These extra warranties are pure gravy for the stores. Industry figures show that in many cases only 4 percent of the people who pay for extra warranties ever make use of them. That means the stores can't lose. With a 96 percent payoff, these stores have tripped over a gold mine. It's such a rich lode that many TV and appliance stores have actually become warranty stores. Industry figures show that many stores make more money selling extra warranties than they do selling the appliances themselves.

This is a disturbing trend. Most of us are smart enough to smell a fish, even if it's spray-painted and gift-wrapped. The only way these stores can sell needless warranties is by pushing them on us, wearing us down, making us feel guilty if we don't buy them.

That's the same way cars are sold in this country. Nobody who has ever bought a car could possibly want the same bully-the-buyer approach to take over in appliance stores, too.

And yet it is happening. I've seen the industry's own reports and I've been on the receiving end myself three times in the last two months. I'm saddened and discouraged.

But there is a way to resist. I've done it myself, and it works.

First, when you go into the store, make it clear right from the start that you might be interested in buying a TV or VCR or whatever, but that you are not going to pay extra for a warranty.

You may have to emphasize that last part. At one store I had to ask the sales clerk whether he understood what I had just said, since as soon as I said it he began to tell me that "all" the VCRs came that way. No, they all don't, of course. All you have to do is insist.

Second, keep in mind that you are going to get a pitch at the end whether you like it or not. When it comes, swat it aside and be firm.

You can say, "Please stop wasting my time. I've told you already that I'm not paying extra for your added warranty." Or you can say what I overheard a woman tell a clerk: "Just write the thing up, or I'll buy the TV somewhere else."

Other ploys come under the guise of service contracts—or, in the case of VCRs, "annual cleaning."

Service contracts generally make no sense; after all, there's little to service in most hi-fi equipment and small appliances these days. "Annual cleaning" can cost you anywhere from $25 to $100. You're much better off buying a dry-type head-cleaning tape and playing it whenever you want.

Ultimately, the best defense against this sort of thing is a good offense. Choose stores that don't push guilt trips on you, and avoid stores that do. And let your friends and neighbors know where the good guys are.


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